Rent.com.au (ASX: RNT) and digital banking and payments company Novatti Group (ASX: NOV) have unveiled a two-pronged formal agreement to power Rent.com.au’s next generation rental payments solution, RentPay – a service that has been valued at $10 million at pre-launch.
RentPay is a digital solution that claims to offer unparalleled flexibility and choice for the renting community, while offering useful features to property agents and landlords.
The service allows simplified access for renters to make and track payments, set reminders, choose new ways to pay with a “host of other features under development”.
In a joint statement earlier today, the two companies declared they had signed a dual agreement, comprised of a subscription and a Software as a Service (SaaS) element.
Rent.com.au signed a 36-month SaaS agreement that tasks Novatti with building and operating a payments backend with Novatti’s payments scale and potential banking capability set to facilitate a “compelling customer offer”.
The key terms of the subscription agreement include several provisions for Novatti to acquire and raise its stake in RentPay over time. To begin with, Novatti has acquired 2.5% of RentPay for $250,000, with the fee to be paid via services provided by Novatti under the SaaS agreement.
Furthermore, Novatti has an option to acquire an additional 7.5% by February 2021 in exchange for $750,000.
A key aspect of the deal, and confirmed by Rent.com.au, is that Novatti’s percentage shareholding in RentPay will be adjusted to reflect any RentPay capital raising completed by February 2022 at a price which values RentPay at less than $10 million.
In parallel, the SaaS agreement will operate for 36 months on a rolling renewal basis every year.
Novatti has also agreed to develop and integrate its payments technology into the RentPay system and will provide ongoing services to RentPay pursuant to applicable project fees and hosting, subscription and transaction fees.
Novatti’s chief executive officer Peter Cook explained that partnering with Rent.com.au to redevelop RentPay demonstrates the company’s ability to provide products allowing customers to thrive in today’s increasingly cashless economy, while also providing Novatti with exposure to the sprawling rental payments market.
“Novatti has been very easy to work with thus far and we’ve been impressed by the breadth of experience and the enthusiasm they bring to the new RentPay. This is just the type of partnership that we need to develop RentPay into a key product in the rental market in Australia,” Rent.com.au chief executive officer Greg Bader said.
According to the deal terms, Rent.com.au will continue to own the majority of RentPay and will also operate the service moving forward.
The company said it intends to focus on its key strengths of user experience, renter engagement and marketing while the technical and compliance aspects will be provided to RentPay by Novatti via the SaaS agreement.
“As we’ve worked with Novatti to formalise the agreements and drill down to the next level of detail on our plans for RentPay over the past month, it’s become ever clearer that we’ve selected the right partner and, with Novatti having an equity interest in RentPay, both parties will benefit from the alignment that level of partnership brings,” said Mr Bader.